Search for the Best Results and Buy Smarter

One of the foundational rules of sales is that if customers don’t know the product or can’t see it on the shelf when they shop, they’re never going to buy it.

As a result, distribution systems are critical for any business. A supplier can have the best product or service in the world, but if it never appears somewhere the end user can become aware of it, it will never be purchased. Hence the importance of what logistics professionals call “the last mile” in physical supply chains — the final leg of the transportation journey that delivers a product or service to the consumer.

The concept of the last mile applies to corporate purchasing, as well. A superior procurement process and system must ensure that the end users making purchases can find the product or service most suitable for their needs and in compliance with the policies and objectives of the company. This requires capabilities beyond just a series of previously negotiated internal catalogs meant for employees to order goods. A digital transformation in procurement can help companies solve for the last mile and unlock business value.

In this final article of this series, we discuss this digital transformation and explain how organizations can enable systems to help end users know what to buy and how to easily purchase it.

Buying Smarter

It’s fair to say that spend control processes have always been part of procurement’s DNA, and some organizations are hesitant to give up that control in favor of greater stakeholder flexibility. But this is an outdated way of thinking.

Perhaps more important than spend control or spend management is buying smarter. In most cases buying smarter is not about just pricing. Rather, price is often just one element of a broader purchasing equation that evaluates the overall impact to the organization beyond just the amount paid to a supplier. One supplier may offer what appears to be a lower cost. But that number may not factor in additional costs such as logistics and shipping, or factor in known risk related to a supplier that has problems with delays, or frequently has packing errors resulting in returned goods.

Buying smarter is about securing the highest value for the user and the business by analyzing and comparing all your purchasing options; ensuring that the option you pick aligns with your firm’s contracts, policies and business rules; remaining within the established budget of your business unit; and, of course, fulfilling the user’s business requirements.

The most essential element of buying smarter, however, is the ability to search and find all viable options and supplement them with appropriate information to compare and analyze a potential purchase. The core requirement for supporting this capability is to have 100% accurate, real-time data.

Finding the Best Results

In procurement, the last mile means delivering negotiated content, and potentially broader market data, to the end-user’s screen — usually within an e-marketplace (e-store) connected to an end-to-end e-procurement solution. The effectiveness of the e-marketplace largely depends on how easily the user can apply keywords, filters or specific data to search between all available catalogs (internal, external and public) and bring the results from the search into a screen that presents key data in real-time for analysis and comparison.

The effectiveness of this process will depend on how the purchasing data is stored or accessed, how current it is, how many attributes and supporting details are available and how well they are displayed in a consumable format. This allows for comparison shopping in a competitive environment.

But there is another capability needed to help users find the best results during a search process: systems that guide the user toward the best purchasing option, as identified by a procurement function that ensures business value is prioritized in the decision-making process. This is where the ability to configure workflows and business rules come into the mix, to allow for compliant shopping in an environment that enforces policy and business rules.

In the market today, e-procurement solutions have varying levels of progressively more advanced search capabilities. These include:

Those that only search internal, or what are sometimes called hosted catalogs

Those that can search in external catalogs (typically on a supplier’s own website) but not directly from the marketplace. The user needs to know whether to look for the product or service within e-procurement or “punch out” to a supplier website, and if so, which one. The user must then go to the supplier's online store to run a search, and then bring the selected product(s) or service(s) back to e-procurement to finalize the requisition process. This is known as a Level 1 punch-out.

Those that can store some of the information from an external supplier catalog inside the e-procurement system. This is often called Level 2 punch-out. The e-procurement search engine can find these products or services within users’ searches and can be compared with others results. There are several drawbacks to this approach because storing this information requires constant updating to avoid differences while processing the order, the user still must go to the external site to verify price, and many suppliers don’t support Level 2 punch-outs at all.

Those that have access to real-time data from some external supplier websites and can search across both internal and external catalogs at the same time, with access to data from suppliers that provide it. This requires a different type of integration process to ensure the real-time data updates and requires supplier cooperation to enable it.

Those that can search for products and services across any internal or external catalog or marketplace (without requiring any type of integration or commercial agreement). These search processes work in a similar way to Level 1 and Level 2 punch-outs, but the difference is that since there is no need for a commercial agreement nor an integration, the search capability must be able to bring the required procurement data into the requisitioning process.

A Self-Assessment

Smart buying can be a controversial concept, especially when it’s absence would imply that the opposite type of buying is happening.

But if procurement sets aside concerns of the occasional ruffled feather, a candid dialogue can occur within an organization. The concept of buying smarter introduces the possibilities that e-procurement solutions offer to organizations. This includes a transformed experience where purchases are made with real-time data, where all available supplier options are compared under the best economic terms, where all risks are minimized and where compliance with business policies and rules is always ensured.

As a self-assessment for the intelligence of their buying practices, procurement leaders can look for the following foundational pillars of an e-procurement approach.

E-catalogs as a dynamic and integrated source of real-time data that enables all purchasing scenarios. Sometimes an integration within a supplier’s systems is required to assure real time data while purchasing. The e-catalog is a key part of any e-procurement solution and goes beyond a static list of items, prices and features of products and services.

An e-marketplace (e-store) with an easy to use interface. All available sources a (e.g., internal or external catalogs, e-forms, lists, kits, bundles, templates, policies, etc.) are accessed by a powerful search engine. Search results are returned to a single interface that display alerts and real-time data to support the comparison of the results and to enable a good buying decision.

Advanced requisitioning mechanisms with a real-time guided buying approach. A requisitioning process linked to e-catalogs and e-marketplaces enables procurement to bring more spend under management, while at the same time to guide users to a cost-optimized approach in a simplified manner (guided buying) and to enable compliance with internal policies and procedures (e.g., online help, workflows and business rules). This requisitioning process is normally integrated with other enterprise systems (e.g., IMS, WMS, CLM, SLM) to fulfill all requirements as part of a comprehensive digital transformation strategy.

Successful implementation of these principles will meet the challenge of the last mile in corporate procurement. To deliver a better buying experience fueled by modern search technologies, while at the same time driving business value by guiding employees to the right products and services is more than an advanced procurement strategy — it’s just plain smart.

Related: Free Webinar

Join Spend Matters’ Xavier Olivera along with a series of guests from Aquiire and the LDS Church as they discuss the benefits of real-time data and how they and others are using it to their advantage.

Register now for one or all of these quick-hit 15-minute webinars:

PART ONE: Achieving True Purchasing Control Through Real Time Data, Guided Buying, and Compliance